Can Veterans Receive VA Disability Pay and Separation Pay?
Many veterans with service-connected disabilities cannot work a full-time job or maintain meaningful employment. This means these veterans rely on disability compensation for their bills — and it is an important piece of the financial puzzle for many. Many separated veterans who receive disability compensation want to know if they can receive VA disability pay and severance pay at the same time, and VA Benefits Attorneys has the answer.
Yes. Veterans can collect VA disability pay and severance pay — but not for the same period of service. When a veteran receives disability and severance pay for the same period of service, the law requires that the U.S. Department of Veterans Affairs recoup money for separation pay to match after-tax totals. This money can be recouped by withholding disability pay until the money is repaid.
Differences Between VA Disability Pay and Severance Pay
Many veterans may not know what severance pay is and may not know the differences between disability pay and severance pay. VA disability pay is compensation for veterans who have a service-connected injury, illness, or medical condition with payments made each month. Veteran severance pay — also known as disability severance pay or separation pay — is financial compensation for veterans with less than 20 years of service in the military and a disability rating that is below 30%.
Here is a better look at the key differences between disability pay and severance pay:
| Feature | VA Disability Pay | Veteran Severance Pay |
|---|---|---|
| Payment Type | Monthly — Ongoing Payments | One-Time Lump Sum |
| Eligibility | Veteran with Service-Connected Disability Rated 10% – 100% | Veteran with Less Than 20 Years of Service and Disability Rating Under 30% |
| Tax Status | Tax-Free Payments | Taxable — Unless Combat Related |
| Payer | Paid by Department of Veterans Affairs | Paid by Department of Defense (Department of War) |
| Dependent Benefits | Monthly Payments Increase with Dependents | Based on Rank and Years of Service with No Dependent Increase |
How Is Veteran Severance Pay Recouped?
When a veteran is granted separation pay benefits and then later approved to receive disability pay from the U.S. Department of Veterans Affairs, the veteran will have the sum of the severance pay after taxes recouped by the government. In most cases — severance pay is recouped by stopping or reducing the amount of disability pay that the veteran receives each month.
There are exceptions to the rule for veterans who receive severance pay due to specific circumstances — or for veterans who received disability pay prior to separation. Key examples of exceptions where veterans do not need to repay severance pay include when the disability is combat related, the disability and severance pay are for different periods of service, the veteran is a Medal of Honor recipient, or the veteran has a non-service aggravation of the disability.
READ MORE: Does Medication Affect VA Disability Ratings?
Veterans may be eligible for a variety of different financial benefits that include disability pay and severance pay, and many veterans want to know — can veterans receive VA disability pay and severance pay at the same time? VA Benefits Attorneys has the answers you are looking for with this quick comparison and breakdown.
